London's equity market was hit again yesterday, extending the hefty sell-off late on Tuesday when bonds and gilts came under fire. At the end of a day of unrelenting weakness, the FTSE 100 was finally 131.4, or 2 per cent, lower at 6,401.7, its worst of the day.

That performance most heavily affected the FTSE All-Share index, which dropped below the recently achieved 3,000 level to close a net 52.8 off at 2,972.09. There were also hefty losses for the mid and smallcaps, where the FTSE 250 was 42.7 lower at 5,844.8, only a fraction above its session low of 5,844, and the FTSE SmallCap 10.6 down at 2,573.2, its worst of the day.

Dealers were by no means totally disheartened by the market's retreat, which was described by one as "a healthy dose of profit-taking". But some argued the downside pressure could continue in the short term. The market's latest slide was triggered by Wall Street's overnight three-figure fall and an increasing view around markets that the Bank of England's monetary policy committee will leave British interest rates on hold when it announces the result of its two-day deliberations today.